KRUGMAN: The Government Has To Do More Deficit Spending To Avoid A Full-On Depression

In order to avoid a full-on depression, the U.S. government needs
to ignore the size of the deficit and start spending to stimulate
the economy, Nobel Prize-winning economist Paul
Krugman tells us.

"Somebody has to spend more than their income, and, for the time
being, that has to be the government," says Krugman.

But what about the deficit, that so many people are concerned
about? After all, Krugman was something of a deficit hawk during
the Bush administration.

He notes two things: One is that the deficit spending under Bush
was totally wasteful, and that that should have been time to pay
down debts. But he also says he's learned from watching the US
and Japan that it's much harder for a country to have a debt
crisis than he previously appreciated.

"My thinking has evolved," says Krugman. "If you haven't updated
your views in the face of new experiences, you're not doing your
job."

The fact that the US has its own currency makes a big difference,
as evidenced by the crisis in Europe, where the countries without
their own currencies are getting into so much trouble.

He still thinks a debt crisis is theoretically possible, but the
evidence of the last several years shows it's much harder than he
realized.